Buying Japan Foreclosures: Getting a Dream for a Song?

With the collapse of Japan's "bubble" economy in 1990 and an aging society, property prices have been on a nearly uninterrupted slide for 25 years. That has elicited interest from a small band of foreigners who are trying their hands at investing in an overseas market.

Buying foreclosed property can lead to bargains 30% cheaper than going through a conventional real estate agent, with no greater risks for those who know what they're doing, Mr. Perkich says. "There are risks in every property. Foreclosures aren't any different."

The firm's website offers a two-tier membership to view current and past foreclosed properties in Tokyo's 23 wards. They also offer consulting services for the uninitiated, with fees around 2% of the purchase price. "Sometimes I get calls from people who have already bought a property at an auction and say, 'What do I do now?'"

Among the potential problems, are properties that have boundary disputes, arrears, or other legal entanglements, or those that have a tenant who won't leave. "Sometimes we need to do evictions. Our fees are a bit higher, but it's no real problem," Mr. Perkich says.

There are a wide range of properties available, with modest to luxury apartments and houses, some commercial properties and even the occasional hotel. Since it's an auction, anything above the minimum price (80% of the appraised value) goes, although you only get one shot to bid. The winning bid for a one-room apartment would typically begin at around ¥4 million ($50,000) with more spacious digs up to ¥30 million ($375,000). Mr. Perkich even has a middle-tier bank willing to lend money to foreigners. "Unfortunately none of the major banks will touch foreclosures," he says.

How did he get started in the business? "I used to buy them for myself."